As of the close of the US stock market, the S&P and Nasdaq have turned lower in late trading, while the Dow has barely managed to rise for three consecutive days. Chip stocks have led the decline in the technology sector, while the China Composite Index has reached a two-week low. On Tuesday, NVIDIA plummeted 7.8%, marking its largest intraday decline since December 2022.
As of the close, NVDA fell 4.68% to close at $439.38, with its latest total market value of $1.09 trillion. The Philadelphia Semiconductor Index fell more than 2% during the day, with a total market value of 73 billion US dollars (approximately 534.3 billion yuan) evaporated from US chip stocks. In terms of other important stocks, Intel closed 1.4% lower and AMD closed 1.2% lower. According to multiple media reports, the Biden government updated its export control regulations for artificial intelligence (AI) chips on October 17th, planning to prevent companies such as Nvidia from exporting advanced AI chips to China.
The three major US stock indices fluctuate
On Tuesday, Eastern Time, the three major US stock indices ended mixed, and US bond yields continued to rise. The previous robust economic report strengthened the rationale for the Federal Reserve to maintain interest rates unchanged for a longer period of time.
US treasury bond bonds were sold off on Tuesday. The yield of 10-year US bonds jumped 13 basis points to 4.83%, and the yield of 30-year long-term bonds rose 12 basis points at the highest, forcing 4.99%, both hitting new highs since October 6, and approaching the highest level since 2007. This puts pressure on the stock market, as higher returns provide investors with relatively high risk-free returns.
As of the close, the Dow Jones Industrial Average closed up 13.11 points, or 0.04%, at 33997.65 points; The Nasdaq fell 34.24 points, or 0.25%, to 13533.75 points; The S&P 500 index fell 0.43 points, or 0.01%, to 4373.20.
Most of the 11 sectors in the S&P 500 index closed higher, with the raw materials sector up 1.01%, the energy sector up 0.98%, the finance sector up 0.55%, the telecommunications services sector up 0.43%, the real estate sector down 0.54%, and the information technology/technology sector down 0.77%.
Popular technology stocks fluctuated, with Amazon down 0.81%, Meta up 0.89%, Microsoft down 0.17%, Google A up 0.45%, Tesla up 0.37%, and Netflix down 1.41%.
Chip stocks generally fell, with NVIDIA falling 7.8% at the beginning of the trading session, marking its largest decline since December last year, closing 4.7% lower, Intel closing 1.4% lower, and AMD closing 1.2% lower.
Most popular Chinese concept stocks fell, with the Nasdaq China Golden Dragon Index falling 0.91%. Baidu fell more than 4%, JD.com fell more than 3%, iQiyi, Tencent Music, NetEase fell more than 2%, Bilibili fell more than 1%, Weibo, Pinduoduo, Alibaba, and Ideal Automobile slightly declined. Man Bang rose by over 3%, while Futu Holdings, Xiaopeng Motors, Vipshop, and NIO rose slightly.
Biden government's ban on upgrading chips
On October 17th, according to media reports, the Biden government updated export control regulations for artificial intelligence (AI) chips, planning to prevent companies such as Nvidia from exporting advanced AI chips to China. According to the latest rules, Nvidia's chip exports to China, including A800 and H800, will be affected. The new regulations will take effect after 30 days of public consultation.
Nvidia responded, "We comply with all applicable regulations and strive to provide thousands of application products that support different industries. Given the global demand for our products, we do not anticipate that the new regulations will have a substantial impact on our financial performance in the short term
These restrictions will also affect the chips sold by companies such as AMD and Intel to China, including chip equipment manufacturers such as Applied Materials, Fanlin Group, and KLA.
According to media reports, in response to the new export control regulations in the United States, Dutch lithography giant ASML stated in a statement that ASML needs to carefully evaluate the potential impact. As far as our business is concerned, according to the information we have received so far, we believe that the number of wafer fabs in Chinese Mainland involving advanced chip manufacturing that apply the new regulations is limited. From a medium to long term perspective, these export control measures may affect the ratio of our different machine sales across regions, but we do not expect these measures to have a significant impact on the company's financial situation in 2023 and our long-term outlook for 2025 and 2030 announced on November 2022, Investor Day. ASML will further clarify the scope of application of these new regulations to the US government. According to media reports, the new measures are also aimed at preventing companies from bypassing chip restrictions through Chiplet's chip stacking technology.
US Department of Commerce Secretary Gina Raimondo stated that the new measures aim to "plug loopholes" and stated that these measures may be updated at least annually in the future. She said, "The new restrictions will only affect a small portion of chip exports to China." Chips used in consumer products such as gaming consoles or smartphones will not be subject to export controls.
According to Reuters, the new restrictions will prevent the export of some AI chips that precisely meet the current technical parameter restrictions to China. According to the report, after the United States issued export restrictions on chips to China last year, Nvidia launched the H800 chip for the Chinese market to replace the banned H100 AI chip. The H800 is widely regarded as one of the targets Washington hopes to block exports to China. Reuters reported that the United States also plans to eliminate the "bandwidth parameters" used to restrict the export of AI chips and replace them with other standards to expand the scope of restrictions.
On the 17th, according to media reports, multiple domestic manufacturers stated in an interview that they had received information in advance, and many of them had already started stocking up in advance. Manufacturers such as Tencent and Baidu have also stated that they are currently "stocking up adequately". The industry believes that this round of lockdown means that the US is attempting to further curb the development of China's computing power, while also limiting the development of the model end. Therefore, domestic GPU manufacturers need to accelerate their development.
According to CCTV News, on October 16th, Foreign Ministry spokesperson Mao Ning presided over a regular press conference. Reuters reporter asked that the Biden government is expected to take more measures to restrict chip exports to China. What is China's response to this?
Mao Ning stated that China has repeatedly expressed its position on US chip export controls to China. We believe that the United States should stop politicizing, instrumentalizing, and weaponizing economic, trade, and technological issues, and stop disrupting the stability of the global supply chain. China will closely monitor relevant trends and resolutely safeguard its own rights and interests.